No. 2. - Latter v. White, 41 L. J. Q. B. 342, 343.

which such compensation or amends is sought to be recovered, although the goods or their value are also sought to be recovered. The case is within the words and spirit of the act, and we think this plea is also good. There will be, therefore, judgment for the defendant. Judgment for the defendant.

Latter v. White.

41 L. J. Q. B. 342-348 (s. c. L. R., 5 H. L. 578).

Detinue for Bills against Surety. — Right of Creditor to Composition after disputing Validity of Deed. Special Case. Power of Court of Error to

draw Inferences. — 23 & 24 Vict. c. 126, ss. 4-10.

Detinue does not lie against the maker of a promissory note after he [342] has delivered it to a properly constituted stakeholder, though he may

have forbidden the stakeholder to hand it over to the person claiming it, and in whose favour it was drawn.

The trustee of a composition deed holding the bills or notes of the debtor or of his surety for the benefit of creditors is such a stakeholder.

This was a proceeding in error against a judgment of the Court of Exchequer Chamber reversing a judgment of the Court of Queen's Bench.

The action was brought in 1869, by the now plaintiff in error, to recover from William White the amount of three promissory notes, and also in detinue to recover possession of the same notes, the said notes having been executed by William White jointly with, and as surety for his son, W. A. White, in performance of a covenant in that behalf contained in a composition deed made between W. White and W. A. White and certain of the creditors of W. A. White, and having been in further pursuance of such deed delivered by the father and son to the trustees named in the deed.

The circumstances out of which the action arose may be briefly stated as follows:

In November, 1867, W. A. White, the son, being a trader and then in difficulties, called a meeting of his creditors to investigate his affairs, when it was found that his estate would not pay more than 7s. 6d. in the pound. Thereupon the defendant, William White, in order to save his son from bankrupety, with which the creditors threatened him, made his son's [* 343] creditors the following offer, viz., first, to secure to the

creditors a dividend of 10s. in the pound on the amount of their

debts, if they would accept that composition in full discharge of their respective debts, and would execute a composition deed, to be registered in bankruptcy; secondly, the payment of the composition to be secured by the joint and several promissory notes of the debtor, W. A. White, and his father the now defendant, William White, such notes to be made and delivered to trustees for the creditors within seven days after the registration of the deed; thirdly, the assets of the estate of the debtor to belong to the defendant, William White.

The offer was embodied in an agreement, and was accepted by the creditors, and among them by the plaintiff, who was a creditor for £2115, and who signed the minutes of the agreement on the 29th of November, 1867.

A deed was accordingly prepared, which was executed by the debtor and by his father on the 16th of December. But on the 17th of December the plaintiff wrote a letter withdrawing his assent to the proposed arrangement, on the ground that the balancesheet laid before the creditors by or on behalf of W. A. White was not correct, and that the consents of the creditors had therefore been obtained by fraud. But the solicitors to Messrs. White returned answer that the deed was sufficiently executed to bind non-assenting creditors, and that it would be registered forthwith, and they denied that the balance-sheet was not correct.

The composition deed was registered on the next day, the 18th of December, under section 192 of the Bankruptcy Act, 1861, and within seven days after such registration the defendant and his son made and delivered to the trustees named in the deed their joint and several promissory notes for the payment to the several creditors of the son the respective amounts due to them as the composition of their respective debts; and soon after William White proceeded to realise the assets of his son, the debtor. On the 24th of December notice was sent to all the creditors of the delivery of the notes to the trustees. All the creditors, except the plaintiff and one other, accepted the promissory notes and executed the deed, and the notes so accepted were paid at maturity. In February, 1868, the plaintiff commenced an action against W. A. White, the son, for the amount of his debt, and, when the promissory notes were formally tendered to him, he refused to accept them.

The action thus brought against the son was referred to an

No. 2.Latter v. White, 41 L. J. Q. B. 343, 344.

arbitrator, and the question raised before the arbitrator was as to the validity of the deed. But the son retired from the reference,

and the award was made in favour of the plaintiff, the deed being thus found to be bad and not binding on dissenting creditors, and a verdict was subsequently entered up for the plaintiff for the amount he claimed.

In consequence of this action, brought against the son, he and his father served upon the trustees a notice, dated the 7th of January, 1869, not to deliver their joint and several promissory notes to the plaintiff if he should apply for them, and on the 1st of March, 1869, the son was adjudicated a bankrupt.

On the 16th of April, 1869, the plaintiff made a demand on the trustees for the promissory notes, but, in consquence of the notice of the 7th of January, the trustees refused to deliver them, assigning as a reason the notice of the 7th of January.

On the 21st of April the plaintiff commenced another action, this time against the father, for detinue of the above-mentioned promissory notes, with the usual money counts. The defendant pleaded the above facts, and the verdict obtained by the plaintiff against W. A. White on the ground that the deed was bad and not binding on dissenting creditors. He also pleaded that he was not possessed of the notes and did not detain them. By consent of all parties the record was withdrawn, and the opinion of the Court was sought upon a Special Case.

The Court of Exchequer Chamber reversed the judgment [344] of the Queen's Bench on the ground that as no power was reserved to them to draw inferences, they could not decide whether the deed was a valid deed or not, and unless it were found acknowledged by the plaintiff that the deed was valid and binding on him he was estopped by the judgment he had obtained on the express ground that the deed was not valid or binding against him; that therefore he must fail so far as his action was founded on the money counts; and as to the count in detinue, as the defendant was not in possession of the notes, he could not be said to detain them, and the plaintiff must fail on that count also. The case in both the Courts below is reported in 40 L. J. Q. B. pp. 9-162; in the report at p. 12 of that volume the Special Case is set out at length. Error was brought to this House.

Sir J. Karslake and Day (with them J. Murphy) for the plaintiff.

No. 2.-Latter v. White, 41 L. J. Q. B. 345.

[345] Mr. Brown, Sir G. Honyman, and Mr. Francis for the defendant in error, were not called on.

The LORD CHANCELLOR (Lord HATHERLEY). [His Lordship stated the facts, and said]: The first question that arises here is as to the form of the action. It certainly appears to all of your Lordships that it was brought in a very singular form. The promissory notes were in the hands of the trustees; they had been placed in their hands, it is true, to be delivered over to the parties who should apply for them. This gentleman had originally refused to make any application for the notes. The notes remained in the hands of the trustees, and after all these proceedings had taken place against the son, then an application was made by the appellant for the notes. The parties who held them appear to me, I confess, to be in the position of stakeholders; they are stakeholders as between the son and the plaintiff in the present action. What happened was this: The father and the son together having executed the notes, and the father, being dissatisfied with what had taken place in this course of proceeding against the son, gave notice to the holders of the notes not to part with them, and thereupon they declined parting with them. I should have thought that if an action could be brought at all, the proper form of action to have been adopted by the plaintiff would have been an action against the trustees for non-delivery of the notes; but instead of that he brought an action against the father in respect of this order, which it is said he gave for the non-delivery of the notes. The trustees chose to act upon that order, and to withhold the notes. The father did not ask to have them delivered back to him or to his son; he asked no such thing as that, he did not profess to be the sole owner of the notes, so as to be entitled to have a re-delivery of the notes to him; all that he said was, do not deliver them to the person who is making the present applica tion. I apprehend that in such a state of things as that he has no right to bring an action of detinue against a person who neither has the notes nor is entitled to demand them back from the trus tees. I see no reason why he should be considered to be in a position in which he had absolute control over the notes. And certainly nothing that has been stated of the facts in this case makes it clear to me that the trustees were his servants or his agents, so as to be in a condition to act solely on his account, so as to be able to say in a Court that what was done by them was

done by him, the defendant, in the present action. He He gave this order either rightly or wrongly. Whether he was entitled to give it or not, is not in that respect of consequence, because the sole question is whether or not at that time the trustees were holding the notes as mere stakeholders, and were bound to hold them for the party entitled, but not bound to hold them absolutely for him. He gave them an order not to part with them: of course if they were simply his servants the action was properly brought against him, but if they were in any other position than that of his servants, the action was wrongly brought against him. Here was a stakeholder holding the notes, and one party said, “Deliver them to me;" the other party said, "Do not deliver them, I forbid it." The consequence is that the course of procedure should have been some mode of proceedings to bring that matter to an issue, but not, I apprehend, by bringing an action of detinue against the person who had not the notes at all nor any power over them, but had simply given an order to the persons having the notes in their possession not to part with them.

Then the action takes another form. There are counts in which the notes are declared upon as if the plaintiff were the holder of them. Manifestly he was not the holder of them, they have never been parted with to him. He says it must be one of two things, either the trustees are agents holding them for me, in which case, clearly and simpliciter, I am the holder, or they must be holding them for the defendant in the action, and then I am

right in bringing my action of detinue * against him. [* 346] But it appears to me that a third case may be that these gentlemen are holding the notes for the proper person, whoever he may be, who may eventually turn out to be entitled to them, but it would be absolutely inconsistent with his action of detinue to say that the defendant holds them, because, as it appears to me, the defendant is only asserting a right to stop the party who is attempting to get possession of them, and it does not on that account follow that he is the proper object of an action of detinue, and that the notes can be recovered from him, he not being in possession of them, and the plaintiff on the other hand not being in possession of them either, the true state of the case being simply that they are in the possession of these trustees who are holding the property in dispute.

That appears to me at once to be a fatal blot in this case.